One of things that struck me very early on in my following of Krugman is his counter-intuitive embrace of inflation. Like most of the world I think, I had always assumed that inflation was always evil and the lower the better. Krugman however believes some inflation is good and necessary especially when an economy is in recession. One of his reasons is that it allows debts to reduced automatically since a future dollar (or euro) would worth less than one that is borrowed today. For people who are hugely indebted, unfairly in his opinion (think US sub-prime homeowners or Europeans economies which grew to fast due to German's pushing exports), this allows them to get back to normal spending quicker in order to get economies growing again.
Krugman also has a post where he explains (or should I say shouts!) that he has been right for five years now that stimulus spending and expansion of the money supply would not lead to inflation. He points out two Fed presidents who have admitted they have been on the wrong side of the argument and then ponders why this has not led to more pronouncements from other individuals who have been very wrong about inflation.
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